Music Magpie still in possible takeover talks
Stockport-headquartered musicMagpie is still in talks for a possible takeover.
The stock market listed business, which specialises in refurbishing consumer technology, disc media and books in both the UK and US, has its Annual General Meeting today (22 May 2024) and will confirm that it is still in a formal offer period.
The business has been under offer since approaches from BT and private equity investor Auerlius Group, but though those two suitors issued statements to say they were no longer in talks, other discussions have taken place.
This morning’s statement said: “Since 27 November 2023 during which time various conversations have taken place with interested parties. Several discussions remain ongoing and as such the Company remains in an offer period.”
As well as the usual legal disclaimers, the statement also reveals that The Takeover Panel Executive at the London Stock Exchange has granted the business a dispensation from the requirements rules of the Takeover Code to identify any potential bidder.
Shares in musicMagpie have fallen from around 20p in November as the takeover talk took hold and have dropped to a 52 week low of 5p per share this month.
When musicMagpie announced the interest from Auerlius Group and BT last week its shares were trading at 18p per share.
Led by founder Steve Oliver, the group will also tell its AGM that trading has been “broadly in line with management’s expectations” and has benefitted from cost control and lower overheads.
“The recent changes in our US Consumer Technology operation, to make the business a sourcing function for the UK, where devices can be sold more profitably, are now fully embedded and the US is providing a regular supply of devices for sale. This strategy change, combined with a competitive UK market, is delivering lower Group revenues, but a strong focus on profitability is helping to support performance and gives the Board confidence in the Group’s medium-term prospects.
“The Rental offering is being managed to balance the opportunity cost of immediate profits from an outright sale and the cash investment required in rented devices, and rental income for the current year to date is slightly ahead of the same period in 2023. The decision to segment the rental offering to higher credit rated customers has now been operating for almost 12 months and the rental book is predominantly composed of higher credit rated individuals.”
The company also said sales of Disk Media and Books have declined modestly at their predicted rates.
The Company recently introduced the strategy of unlocking a ‘world of inventory’ from people’s homes and is expected to launch certain new product categories shortly.
The statement concluded by saying the board is focused on improving profitability and as second-use markets continue to grow, and “remains confident that the ongoing work across the business and the strategy to unlock inventory in people’s homes, positions musicMagpie well for the future.”
